UK Business Loosens Its Belt, Spending Over £1billion Extra on Expenses

‘Little and Often’ Replaces the Long, Expensive Lunch but £350million is Still Leaking Out of UK Business Due to Exaggerated Expenses

LONDON, UK, 21 May 2013 – A report by Concur, the leading provider of integrated travel and expense management solutions, has analysed expense claims made by more than 200,000 employees and reveals that – despite a tough economic climate – UK business spent an additional £1.2 billion on expenses in 2012 compared with 2011. The statistics are a surprise considering the on-going concern about the impact of austerity in the country and in Europe more broadly.

However, UK employees are being much more diligent in claiming for smaller expenses, such as food and beverage, in today’s austere environment and are taking a ‘little and often’ approach to spending. On average, expense-claiming employees received 10 per cent less in expenses (in real terms) than they did in 2010 despite making 7.5 per cent more claims. The report estimates that on average, employees made 36 claims and received just over £2,054 each in expenses during 2012.

Perhaps unsurprisingly considering the instability of consumer spending, UK retailers have demonstrated the biggest commitment to recognising cost savings by reducing the amount of cash spent on expenses. Between 2010 and 2012, retail companies reduced their average expense claim by approximately 30 per cent (adjusted for inflation).

David Vine, Managing Director, UK SMB at Concur comments: “In a tough economic environment we see a culture shift in spending on expenses. For example, the average bill for client entertainment dropped by 20 per cent (1), in real terms over the last two years, implying that employees are aware that they may be frowned upon if they act extravagantly. However, a recent study by Concur (2) revealed that the good old fashioned breakfast, lunch or dinner, has the biggest impact on landing a sale, so organisations must balance spend against potential sales to grow their business. While we’re not sounding the death knell for the decadent business lunch, there’s clearly been a trend towards smaller but more frequent expense claim submissions in the last couple of years.”

However, there is still much work to be done as managers do not provide a robust enough challenge towards “out-of-policy” expense claims. A negligible amount of expense claims are rejected by managers as the report reveals that over 99 per cent of all employee expense claims are approved, regardless of whether they meet the business’s expenses policy or not. Indeed, managers query less than one per cent of all expense claims – hence 94 per cent of claims are approved regardless of expenses policy compliance.

There is certainly a disconnect between manager and employee behaviour, as the findings show that almost £350 million in exaggerated expense claims were made in the UK, in 2012. According to a recent survey conducted by YouGov (3), over one in ten employees (11 per cent) admitted to exaggerating expenses claims in 2012 – a 3 per cent increase compared to 2011. Additionally, 20 per cent of workers surveyed judged it acceptable to exaggerate expenses (again a 3 per cent increase compared to 2011), and this rose to 28 per cent in the private sector.

Vine continues: “There is a big black hole in financial visibility that is costing UK business dear, especially in a business environment where every penny counts. It’s hardly a surprising situation though when a recent survey by Amadeus (4) revealed that 51 per cent say they don’t understand their company’s travel policy fully. Much is still to be done by businesses to enforce their travel policies and educate their employees about expenses.”